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Financial Advisors Have Exciting New Business Models to Choose From

Diamond Consultants - In the News

Financial Advisors Have Exciting New Business Models to Choose From

Posted by Mindy Diamond

The landscape of the financial services industry continues to expand and create new and legitimate landing pads for top advisors that service the high net worth set. If you think about the landscape as a horizontal line, a continuum of sorts, then the wirehouses sit at the far left, followed by regional firms, boutiques like Credit Suisse and Barclays, and any other employee based model. Not much has changed on this side of the ledger- surely, payouts get adjusted annually, fees get raised, new incentives put in place, but no new models have been born in the recent past- at least none worth mentioning. But, looking at the industry continuum makes you realize just how much the world of quasi-independence and everything to the right of it- full independence- has changed and expanded. HighTower Advisors rocked the industry nearly 7 years ago when Elliot Weissbluth launched a firm that would offer advisors equity in the overall entity, access to a complete open architecture, asset custody at a third party custodian, and a true fiduciary model. Its success highlights the fact that employee advisors everywhere are looking for more control, flexibility and freedom and will eschew big name firms in order to get it. HighTower may have been the first of its kind, but make no mistake, many have followed- and will continue to do so. Enter Cantor Fitzgerald Wealth Partners, Robby Stephens, Lebenthal Wealth Management, Snowden Lane, and the like and pay particular attention how the advisors they have all recruited are amongst the most productive in the industry.

Integrating banking and wealth management can mean big opportunities for incoming financial advisors

One model to note, though, is Jefferies, the New York City based mid-market investment bank with a wealth management unit attached to it. With 33 advisors in 12 locations globally, it is the highly integrated relationship between investment banking and wealth management that creates a truly unique opportunity. Jefferies participates in most major deals and with less than 50 advisors to distribute that deal flow to, the possibility for real growth can be transformational and enormous. And, with state of the art consolidated performance reporting, access to unique solutions, 100 SMAs and 55 hedge funds, and the Pershing platform, an advisor looking for a boutique culture where he/she can be part of a community of likeminded advisors, Jefferies is a quiet story not to be overlooked. To be sure, it won’t appeal to all advisors, nor should it, but Mike Armstrong, the newest Head of Global Wealth Management and ex-Morgan Stanley veteran, is very hungry to recruit the right ones into the fold. In this recruiter’s opinion, Jefferies represents a newish model entirely- a well reputed investment bank offering “greenfield” opportunity to advisors who want more independence than they may have now at traditional firms but less than if they went out and built their own as an independent. While the transition packages are not quite as robust as some, Jefferies is offering a highly customizable deal with at least 125% cash up front plus significant kickers on the back end.

It’s a great time to be an advisor. It is a seller’s market and the possibilities have never been brighter.

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About Mindy Diamond

CEO – By counseling advisors on how to ask the right questions and “dig deep”, she helps them look at all of the opportunities available to find the one that allows them to reach their full potential. That is, to best serve their clients and live a life that is in sync with their own beliefs and values. Learn more...

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